India-based Reliance Industries is reported to be in talks with Hong Kong's Li & Fung over a sourcing agreement for its private label business, part of a planned chain of retail stores.

Reliance is said to be seeking a collaborator for global sourcing to meet expansion plans set to kick off in 2007-2008.

A deal between the two could include products such as clothing and household goods.

Reliance believes apparel could make up 20% of its revenues in four or five years.

Li & Fung is a leading trader and exporter of high-volume goods to companies including a number of top US retailers.